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US$929m funding for California high-speed rail project cancelled

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The project, which aimed to connect San Francisco and Los Angeles with a high-speed train that would slash travel times and transform the state's economy, has faced cost hikes and delays.

Washington

THE US Transportation Department said on Tuesday it will cancel US$929 million in federal funds awarded by the Obama administration for a California high-speed rail project and is "actively exploring every legal option" to seek the return of US$2.5 billion the state has already received.

The Transportation Department's Federal Railroad Administration (FRA) said in a letter to California officials released by DOT on Tuesday that it wanted to halt funding because the state had "failed to make reasonable progress".

FRA Administrator Ronald Batory said the state authority responsible for the rail project failed to comply with the terms of the funding.

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California Governor Gavin Newsom, in a statement, linked the Trump administration action to California leading 15 other states in challenging what he called "the President's farcical 'national emergency'," to obtain funds for building a wall along the US-Mexico border.

"This is California's money, and we are going to fight for it," Mr Newsom said of the rail funds.

A coalition of 16 US states sued Trump and top members of his administration on Monday, saying the emergency declaration would cause them to lose millions of dollars in federal funding for national guard units dealing with counter-drug activities and that the redirection of funds from authorised military construction projects would damage their economies.

Mr Newsom said the state is properly using the money to build a scaled down version of the project to connect the state's central valley.

"This is CA's money, allocated by Congress for this project. We're not giving it back," he tweeted.

Initially conceived as connecting San Francisco and Los Angeles with a high-speed train that would slash travel times and transform the state's economy, the planned US$77.3 billion high-speed rail project has faced cost hikes, delays and management concerns.

California planned to build an 826.8-km system in the first phase that would allow trains to travel at speeds up to 354 kph between the two cities and begin full operations by 2033.

The Obama administration awarded the state a total of US$3.5 billion in 2010 and California voters in 2008 approved nearly US$10 billion in bond proceeds.

California can challenge the government's action.

President Donald Trump has lambasted the project as wasteful and called for the state to return federal funding.

"We want that money back now. Whole project is a 'green' disaster!" Mr Trump said in a Feb 13 tweet. REUTERS, BLOOMBERG